When is the right time to refinance your mortgage?

Recent comments from the Bank of England suggest that UK base rates could be headed lower in the short term. This seems to be based on the likelihood of a no-deal Brexit which is currently the central policy of the new Prime Minister Boris Johnson. While we have seen this type of speculation in the past, money markets are now indicating this is a very real possibility and one which homeowners may need to address. So, when is the right time to refinance your mortgage?

Uncharted waters

To say that we are in uncharted waters in the UK is an understatement to say the least. The 2008 economic downfall was like no other seen in living memory. The slow economic recovery could be described as “false” bearing in mind the amount of quantitative easing and historically low interest rates propping up markets. So, if we now turn our attention to the potential to refinance mortgages, when is the right time?

Today is the only certainty

If we take a step back and look at the situation from a distance, interest rates today are the only ones we can quote with any real certainty. Yes, the Bank of England has suggested UK base rates could fall in the short term to cushion the blow of a no-deal Brexit. However, if you wind back just a few months there was speculation that UK base rates could be headed higher, so can we believe with any certainty what Mark Carney is saying?

The reality is that Mark Carney has discussed an array of different potential scenarios surrounding Brexit and the media decide which element of his discussions they highlight. While discussing the potential for a fall in UK base rates in the short term, he may well have also discussed an increase in base rates if a trade deal with Europe is secured. Much of this is down to media manipulation, amid speculation that the vast majority of the UK media support remain to a certain extent.

Refinancing your mortgage

As we mentioned above, the only definite interest rate is the one you see before you today. So, if you are considering refinancing your mortgage it is probably worth approaching a mortgage broker to see the best deals on offer. You would obviously need to take into account any additional charges, early redemption penalties, locked in interest rates and forecasts for the future. However, those who took out their mortgages prior to the 2008 worldwide economic crash may have the potential to secure some significant savings on interest payments. Look at the figures, discuss them with your mortgage adviser and take the most appropriate action for your situation – ignoring the continuous chatter and speculation.

Mortgage market competition

It is also fair to say that we are seeing more and more competition within the UK mortgage market. While, London aside, the UK property market has performed admirably in the difficult conditions, transaction numbers are under pressure. As a consequence, many mortgage providers will accept reduced profit margins to increase their transaction volumes and share of the market. Therefore, either approaching mortgage providers directly or using the services of a mortgage broker, there may be the opportunity to introduce a degree of competition when looking to refinance your own mortgage. You might be surprised!